Attrition & opportunity

Among the best advice I received growing up was to never try to milk out a cow with the preacher standing nearby. In later years, I discovered the same rule applies to sifting through USDA data, if you can even find what you're looking for to begin with. But such searching and sifting is worthwhile for anyone sick and tired of hearing that monotonous chorus about needing to increase efficiency in

Among the best advice I received growing up was to never try to milk out a cow with the preacher standing nearby. In later years, I discovered the same rule applies to sifting through USDA data, if you can even find what you're looking for to begin with.

But such searching and sifting is worthwhile for anyone sick and tired of hearing that monotonous chorus about needing to increase efficiency in order to survive.

A decade ago, there were 855,460 operations with beef cows in the U.S. By the end of 2007, there were 766,350 — that's 10.4% fewer, according to “Livestock Operations Final Estimates” published in March by the Agricultural Statistics Board. The beef-cow inventory declined about 4% during the same time frame.

Judging by the attrition rate of various herd sizes, economy of scale continues to be a key driver of efficiency and sustainability.

Operations with 500 head or more increased 7.8% between 1998 and 2007, growing to 5,850 operations. Conversely, the steepest attrition occurred in operations with 50-99 head, declining 15.3% to 85,850 in 2007; operations with 1-49 head declined 10.6% to 606,200. The number of operations with 100-499 head declined but at a slower rate of 2.6%, down to 68,450 operations in 2007.

Relative to the total number of cattle operations, the percentage of those with 100-499 head grew slightly, increasing from 8.2% of the population in 1998 to 8.9% in 2007. The segment with 500 head or more grew the most, from 6.3% of the population in 1998 to 7.6% in 2007.

At the same time, according to the 2007 Agriculture Census released in February, the amount of land used for agricultural production has declined by 32.7 million acres since 1997. About half of that decline — 16.2 million acres — has left agricultural production since 2002. Most of that — 13.8 million acres — represents land used for pasture.

This includes cropland used for pasture and grazing, pastured woodland and permanent pasture and range, which has declined 2.8% since 2002. Land used for pasture and range represented 51.3% of all agriculture land in 2007; 52.2% in 2002.

Ironically, the number of farms has grown 3.6% since 2002 to 2.2 million. Unsurprisingly, the growth since 1997 has come in farms of 1-9 acres (+13.4%) and those with 10-49 acres (+16.8%). During that time, farms with 2,000 acres or more has increased 8%. Farms with 500-999 acres and 180-499 acres have declined the most over that time, -16.6% and -14%, respectively.

When classified by value of sales, farms selling $1,000-$2,499 worth of product increased 29.9% since 1997. Keep in mind USDA defines a farm as an entity selling $1,000 or more worth of produce during the year. All other value categories declined, except for those selling $500,000 or more worth of product, which increased 65.2% over the last decade.

So, short of subsidizing a hobby or sentiment, it seems economic sustainability will continue to be about increasing efficiency via raw volume and other means, or figuring out how to differentiate your product enough from the neighbor to add value and then devising ways to retrieve that added value in the form of dollars.

In other words, producers who intend to remain in the cattle business as a business will be rewarded for defining why they're in business to begin with and what competitive advantages they possess. There's plenty of economic incentive.

Looking 10 years out, USDA Economic Research Service analysts concluded in their recent “Agricultural Projections to 2018” that: “Higher grain prices, as well as effects of drought on pasture conditions in recent years, hold down cattle inventories, pushing U.S. beef production down in 2009-12.…The total cattle inventory drops below 94 million head before expanding to about 97 million at the end of the projection period.…Once the production adjustments have occurred, prices level off at a new higher plane.”